Natural gas futures are edging higher shortly before the regular session opening and the release of the latest government storage report. The market is being underpinned by forecasts calling for cold weather over the short-term. However, what traders are really waiting for are the intermediate and longer-term forecasts since the short-term forecast has already been priced into the market.
At 12:55 GMT, March natural gas futures are trading $1.852, up $0.008 or +0.43%.
On Wednesday, prices were boosted by weather models calling for much chillier temperatures in the United States next week. Spot gas prices also rose as a cold weather system is forecast to drop into the Northern Plains before sweeping across the East later this week. The Natural Gas Intelligence (NGI) National Average jumped 12.0 cents to $1.805.
Short-Term Weather Outlook
According to NatGasWeather for February 13-19, “A frigid cold shot will sweep across the Midwest and Northeast the next few days with lows of -20s to 10s for strong demand. Chilly, lows of 30s will also advance deep into the South and Southeast to aid national demand. A mild break will follow across the South and East this weekend into early next week with highs of 50s to 70s returning. However, a colder trending system remains on track to sweep across the central and northern US during the second half of next week for a return to strong national demand. The West will see a mix of mild and cold.
U.S. Energy Information Administration Weekly Storage Report
Traders are looking for this week’s EIA report to show a 112 Bcf withdrawal for the week-ending February 7.
A Bloomberg survey of nine market participants showed a range of withdrawals from 102 Bcf to 112 Bcf, with a median draw of 108 Bcf. A Reuters poll included a much larger pull of 122 Bcf and a median of 110 Bcf, while a Wall Street Journal poll averaged a 109 Bcf draw. NGI’s model projected a withdrawal of 113 Bcf.
The main trend is down. However, momentum has shifted to the upside. A trade through $1.906 will change the main trend to up. A trade through $1.753 will signal a resumption of the downtrend.
The short-term range is $1.906 to $1.753. Trader reaction to its 50% to 61.8% retracement zone at $1.829 to $1.847 will determine the direction of the market today.
Look for a bullish tone on a sustained move over $1.847. A downside bias will develop on a sustained move under $1.829.
This article was originally posted on FX Empire
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